Incompetent Economists

The Daily Reckoning

Jun. 27, 2012, 2:57 PM

When, exactly, did economists become charlatans? Probably in the early-mid 20th century. That's when they stopped listening and began commanding. Instead of trying to understand how economies worked, they started to tell them what to do.

And now, economists are almost all mountebanks and scamsters.

They pretend to know what they don't know at all. And they pretend to be able to do what they can't do. They meddle. They interfere. They make precise estimates and forecasts. They make pompous judgments. They almost sound like they know what they are doing.

Last month, The Atlantic magazine proved that it is run by half-wits. It put a photo of Ben Bernanke on the cover with the headline: "The Hero."

"Ben Bernanke saved the global economy," said the description.

Oh really? How did he do that? Don't bother to ask. Nobody knows what was wrong with the global economy…whether it has been 'saved'…or how it was saved…least of all, the editors of The Atlantic.

Certainly, Ben Bernanke doesn't know. The biggest credit and real estate bubble of all time blew up on his watch…anyone could have seen it coming. But not Ben Bernanke. And how could he possibly 'save' a situation that he neither saw nor understood?

Beats us.

Our assessment of Bernanke is closer to that of Mike Shedlock:

We can state without a doubt that Bernanke is an inflationist jackass, devoid of common sense. Clueless about trade, debt, history and gold.

Shedlock believes The Atlantic cover will earn it a spot in the contrarian magazine cover hall of fame, next to TIME's famous 2005 cover: "Home $weet Home," which lauded the advantages of buying a house.

We don't know. But we know Bernanke is an economist. And economists are frauds. Can they make us richer? No. Can they make the economy work better? No.

What can they do? They can cause problems and then come up with claptrap solutions that make them worse.

Here is Joseph Stiglitz again, missing the point:

US inequality is at its highest point for nearly a century. Those at the top — no matter how you slice it — are enjoying a larger share of the national pie; the number below the poverty level is growing. The gap between those with the median income and those at the top is growing, too. The US used to think of itself as a middle-class country — but this is no longer true.

The country will have to make a choice: if it continues as it has in recent decades, the lack of opportunity will mean a more divided society, marked by lower growth and higher social, political and economic instability. Or it can recognise that the economy has lost its balance. The gilded age led to the progressive era, the excesses of the Roaring Twenties led to the Depression, which in turn led to the New Deal. Each time, the country saw the extremes to which it was going and pulled back. The question is, will it do so once again?

See how it works, dear reader? Stiglitz has no interest in what really causes "inequality." Nor does he care what role it plays in an economy. He is simply convinced that it is 'bad' and that we must "do something about it!" What does Stiglitz propose? Raising taxes on the 'rich' of course.

In his mind, the economy is always losing its "balance" and going off the rails. And then, thank God, the economists of the progressive era and the New Deal come to the rescue.

But how does he know what balance an economy should have? Of course, he has no idea…only his own prejudices and preferences.

Economists are vain and incompetent. So are a lot of people. But what makes economists particularly reprehensible is that they are willing (and alas, able) to impose their prejudices on the rest of us.

How do they do that? Ah…we are about to reveal the dark secret of economists, GDP and other claptrap.